The coming year could see parties pursue more tortious claims in the courts
When pursuing a potential breach of contract in construction cases, economic torts have not typically been the first port of call for a chosen course of action. Economic tort claims (raised where a defendant has caused intentional harm to business interests likely to result in economic loss) have tended to be made where there is no other foundation for a claim and, due to their high evidential burden, are uncommon. This is especially relevant in a construction context following Thomas & Anor v Taylor Wimpey [2019], which effectively narrowed the avenues to claim for pure economic loss by finding Lord Bridge's dictum in Murphy v Brentwood - that a claim can be brought in negligence to recover the cost of obviating potential danger caused by a defect - to be unsubstantiated.
An economic tort claim does, however, open doors in theory as you do not need to have contracted with a party to claim against them.
Whether due to a rising trend in the likes of NEC and Alliance contracts actively discouraging claims, parties towing the contractual line (thereby limiting contractual courses of action) or maybe the contractual route being unavailable or undesirable for other reasons such as limitation periods, construction claimants have been getting more creative in the Courts and we expect this trend to continue in 2020. The recent examples of Flexidig v Coupland [2019] and Palmer Birch v Lloyd [2018], may signal a rise in tortious construction claims.
In Palmer Birch v Lloyd, the Court found that directors who evade debt unjustly by using a company's separate corporate personality and intentionally placing that company into liquidation can still be personally liable under economic tort. Similarly, Flexidig v Coupland involved a claim from Flexidig against the incoming subcontractor for rendering breach of contract by the employer (potentially as a means of avoiding a counter-claim by the employer for the cost of employing Coupland). The court found that the employer was entitled to employ another contractor. Flexidig was unsuccessful.
Whilst economic tort is not necessarily an easy route for a claim and we do not predict an onslaught of tortious claims, we do think we will continue to see more torts in courts for construction cases in the coming twelve months, perhaps as a last resort and perhaps as parties have to become more inventive.
Read the rest of our projects & construction predictions here.
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